The credit crunch has had a detrimental impact on our society, resulting in many people losing their property and being forced to enter Bankruptcy. In some instances, Bankruptcy will be unavoidable, however there are some tips which can help people avoid the insolvency debt solution.

Tip 1 – Face your debt

First and foremost, it’s important to face your debt problem head on. It can be too easy not to open the mail or answer the telephone, but sinking your head in the sand won’t resolve the problem, it’ll only get more difficult until you’re struggling to sleep and the stress is affecting your personal life.

Tip 2 – Identify the problem

Identifying the problem is often the easy part, resolving the problem is a lot more difficult. For example, if you have lost your job then your income will be reduced dramatically. However, by identifying the debt problem you can do something about it, such as apply for benefits for additional short term support.

Tip 3 – Complete an income and expenditure

An income and expenditure can help you understand how much money you can realistically afford to pay back towards your debt. If after completing your monthly income and expenditure you realise you have no available money, then you can share this information with your creditors to help agree a monthly repayment plan.

Tip 4 – Live within your means

When you complete your income and expenditure you should ensure you are living within your means. Nights out for entertainment, excessive allowances for clothing and overspending at the supermarket will have to be reduced. You can subscribe for financial tips to help you budget.

Tip 5 – Consider all debt solutions

Bankruptcy may in fact be the best debt solution for you, however you may wish to consider all other debt solutions, such as a debt management plan, IVA or Protected Trust Deed Scotland

Tip 6 – Share your problems

By sharing your financial or money problems with friends, family and debt experts you can gain advice and moral support through the difficult financial journey.

Tip 7 – Speak to your creditors

Speaking to your creditors is often one of the most daunting tasks, especially if you have to tell them you cannot afford to repay the money you borrowed. While it may be a difficult experience, it can often minimise the likelihood of the situation getting worse and creditors, such as your bank and credit card company, may be able to provide assistance and support. In any event, at least you won’t be ignoring the telephone, just in case your creditors are trying to contact you.

Tip 8 – Negotiate payments

When you speak to your creditor you can explain your debt situation and summarise why your debt problem exists. Often the reason is because of a personal issue, for example a marital breakdown, loss of employment or additional expenditure after having a baby. Even if you cannot afford to pay your minimum payment to your debt, you should speak to your creditor’s arrears department and come to a short term arrangement where you can repay an affordable pro-rata amount.

Tip 9 – Make your payments on time

When you can’t afford the minimum payment towards your debt it’s important not to think “I can’t afford the total amount, so I’ll pay nothing”. Always make a payment towards your debt on time. As a result, your creditors will know you want to repay your debt but that you can’t afford to pay the full minimum contractual payment.

Tip 10 – Don’t delay

Waiting, worrying and hoping the situation will resolve itself only means the situation will get worse. A debt management plan will enable you to repay all of your debt and may be able to freeze your interest and charges in the meantime. By waiting to see what happens, you could eventually have a debt problem which is too severe to resolve with an informal arrangement and a solution such as Bankruptcy may become the only realistic option.

This was a guest post by Debt Support Trust – a register charity providing telephone and internet based help. The debt advice team at Debt Support Trust – (Twitter follow: is a mix of qualified debt experts and volunteers.

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